The government has been urged to maintain the mandatory Employees Provident Fund (EPF) contribution rate for foreign workers at 2% for a reasonable period to allow businesses to plan accordingly.

Federation of Malaysian Manufacturers (FMM) president, Tan Sri Soh Thian Lai, emphasised that any future policy changes, including potential adjustments to the contribution rate, should be made in close consultation with the private sector, particularly industries that rely heavily on foreign labour.

Soh also stressed the need for clear guidelines on the mechanics of the contribution scheme, its integration with existing social security schemes, and the potential for further refinements.

Welcoming the government’s decision to implement the reduced 2% EPF contribution rate, as opposed to the previously proposed 12% announced in Budget 2025 last year, Soh described the move as a welcome relief. “This decision is a welcome relief and reflects the government’s responsiveness to industry concerns by striking a balance between worker welfare and business sustainability,” he said.

He further affirmed FMM’s commitment to working closely with the government to ensure policies affecting the manufacturing sector remain well-balanced, fostering both business growth and fair labour practices.

Meanwhile, The Malaysia Budget and Business Hotel Association (MyBHA) welcomed the government’s decision to implement a lower EPF contribution rate of 2% for foreign workers. “This move is seen as a progressive effort to support the resilience of local businesses, particularly in the hospitality sector, amidst rising operating costs,” said its president, Dr Sri Ganesh Michiel.

However, MyBHA urged the government to ensure that this policy is accompanied by strict enforcement against short-term rental accommodation (STRA) providers who often employ foreign workers without complying with labour laws and regulations. “This issue has created unfair competition within the hospitality sector and significant challenges for licensed service providers that adhere to regulations,” he said.

Malay Chamber of Commerce Malaysia president, Norsyahrin Hamidon, described the EPF contribution for foreign workers as a beneficial move. “It will also increase EPF’s coffers so they have more to invest in strategic sectors, and the foreign workers’ welfare is presumed better taken care of,” he said.

However, he acknowledged that not all employers would be pleased with the decision. “It may face backlash from certain employers,” he added.

Meanwhile, Kuala Lumpur and Selangor Indian Chamber of Commerce and Industry president, Nivas Ragavan, voiced uncertainty over where the 2% EPF contribution would be channelled, given that foreign workers are already protected under PERKESO.

SME Malaysia president, Chin Chee Seong, also  expressed concern that many small and medium enterprises (SMEs) would struggle to cope with the additional costs.

Chin questioned whether the increase would provide any tangible benefits to businesses, workers, or the country as a whole. He pointed out that while the contribution for interns remains at 12%, even a 2% increase for foreign workers could significantly impact businesses financially.

(Source: The Star) 

• TAGS:
• Chin Chee Seong
• Dr Sri Ganesh Michiel
• Employees Provident Fund
• Federation of Malaysian Manufacturers
• Foreign Workers
• Kuala Lumpur and Selangor Indian Chamber of Commerce and Industry
• Malay Chamber of Commerce Malaysia president
• Malaysia Budget and Business Hotel Association
• MyBHA
• Nivas Ragavan
• Norsyahrin Hamidon
• SME Malaysia
• Tan Sri Soh Thian Lai